@derryb said:
one might be wise to consider gold mining stocks are gold mining ETFs in lieu of hard metals. A case could be made that your average investor will run to them, instead of hard gold, when the stock bubble does explode.
If stocks are going down, gold stocks will likely go down.
Gold companies and gold stocks have been destroyers of shareholder value for DECADES.
Not even close to true. Gold mining stocks FAR outperformed the stock market from 1929-1936. Check out Homestake Mining Co which was one of the leading companies at that time. Miners went on to new all time highs before 1936....it took the SM 25 yrs to make new highs. Miners surely outperformed the regular SM from 2002-2008...and it wasn't even close. There are many other periods as well. Don't invest in single mining companies, buy an index fund like XAU, GDX, GDXJ, HUI, etc. There are plenty of ways to spread your risk out. And on the flip side, poorly run companies in the DOW and S&P have been destroyers of wealth for DECADES too. As they approach insolvency those companies are removed from the main indexes.
@dcarr said:
For all of the 1990s, the price of silver was in the range of about $10 to about $12.
Silver is double that now.
I think it IS going higher. I like the longer-term supply/demand fundamentals.
But I wouldn't invest on that or bet the farm on it. A small %, only what you can afford to see go down 50% and not lose sleep.
And from 1929-1954 the stock market didn't gain at all. The Dow went sideways or down for 10-12 years from 1966-1982 and also from 2000-2010. So what's your point of suggesting ONLY PMs do this? Cherry pick a down period for PMs and I'll cherry pick a comparable down period for the stock market. Again, what's your point? Why do inane comparisons like this only seem to show up in print when stocks are out-performing metals in the shorter term? Now if you were on this forum from 2000-2011 that would have a been a period where gold, silver and miners FAR performed the stock market. Will you be around here to discuss the next 10-12 year out-performance by PMs when the stock market severely corrects in both time and amplitude? Or course not. You'll have nothing to discuss.
You are talking about putting $$$ into illiquid, difficult-to-sell tangible assets to replace liquid, easy-to-sell financial assets.
That strategy is unlikely to appeal to most Americans and even less likely to prove a winning combination.
Gold is a pretty liquid item that you can sell within 24 hrs to any number of local, regional, or national dealers. Heritage makes a market every day in most gold and silver items. Their buy/sell spreads range around 5% typically. I can pick up the phone and within an hour get 95% of market on any US gold coins I own. I call that very liquid. Most resellers out there right now like Ampex, JMBullion, etc. are short of inventory across the board. They've been sold out of numerous gold and silver coin inventory for months. The only illiquidity going on here is that the big buyer can't get enough stuff to sell to their customers. That includes common items like slabbed gold and 90% silver coin. Yes, premiums are strong....because the inventories are low and PMs are a lot harder to get in quantity.
I recall the Oct 1987 stock crash when I called my broker to get out of some insurance company and oil stocks I owned. They told me they weren't taking any sell orders until January. They were swamped. What a joke. Now that's ILLIQUID.
Tell us again how gold and silver were a losing combination from 2000-2011 (as gold went from $252 to $1923) while stocks where the place despite being FLAT for 12 yrs......lol. Your point is that gold was NOT an investment from 1999-2011? It was pretty obvious to me it was as I started buying heavily in arly 2004. That was when I first found out that companies like JPMorgan had tens of $TRILLIONS in an opaque and unregulated market called over-the-counter derivatives. That was the wake up call. Gold was approx $315 at that time and silver $4's. The Dow had been down for 3 yrs and looked to be going nowhere (which it did until the March 2009 crash bottom).,,,which took it back to early 1997 levels. 12 years of going nowhere BUT maybe paying some dividends. Gold didn't pay any dividends or interest but it went up 7.6X. Which was better, $0 gain but dividends or 7.6X higher and NO interest?
Other good periods for PMs were 1966-1980 (when the stock market floundered for 16 yrs). Markets are cyclical. And to think only stocks are safe and liquid "for the long term" is not smart. The best US rare coins went up 15X from 1975 to 1980. And then again 5X from 1985-1990 and probably 3x from 1996-2008. The point being, there are times to be more heavily into specific items and times to be light or out of others. In a bigger picture, the massive inflationary period since 1913 is coming to a major shakeout. Don't bet on what's been the norm for 10 yrs, 40 yrs, or even 80-100 yrs to protect you. Your customers and investors deserve better from you.
@tincup - regarding the environment such as it is and the percentage in precious metals - I would first say to pay off all of your debts, including your mortgage and any other loans.
Then I'd focus on a steady accumulation of precious metals, up to 50% of your net worth, maybe even more. The 5% to 10% recommendation is bullshit, pardon my french. But, it has to be physical pms, not ETFs or stocks.
I started out with a 25%/50%/25% silver/gold/platinum mix about 15 years ago when I first started keeping track, but it slowly became 15%/70%/15% as the price of gold gained while the others languished. No worries - silver and platinum will have their day, and the mix is very nicely-balanced.
I keep a cash reserve that is enough to keep me liquid for at least 2 years if the banks have a meltdown. No debt, pms, cash and a house with vehicles. Works for me.
Q: Are You Printing Money? Bernanke: Not Literally
@derryb said:
one might be wise to consider gold mining stocks are gold mining ETFs in lieu of hard metals. A case could be made that your average investor will run to them, instead of hard gold, when the stock bubble does explode.
If stocks are going down, gold stocks will likely go down.
Gold companies and gold stocks have been destroyers of shareholder value for DECADES.
When stocks go down sellers will be looking for an alternative. Most know gold is an alternative, but are reluctant to take possession when they can make an easy PM play with miner ETFs
As far as the safety and steady gains of the Dow Index. Look at the 86% loss from 1929 to 1932. A major 80-100 yr correction is in the cards this decade. Who can say what % drop that will be? I see a very trackable 4th wave triangle from 1997 to 2015 that was broken out from on the way to the 37,000 high. I would expect the Dow to eventually retrace into that 1997-2015 triangle (expanded wedge). The triangles have excellent symmetry too. That means a drop to 4,400-18,200. I only pick the 18,200 mark because that's about where the deep March 2020 Pandemic crash went to. I expect that to be re-tested....and probably well below that deeper into that 15 yr triangle. Such a move will shock the Dow faithful as they think a 50-66% correction as "impossible." But, those things are quite common, esp. when correcting a move from 1932 to 2022 that went around 60 to 37,000. This probably happens by the next 8 yr business confidence cycle low due in 2028....when gold should make another all time high.
@roadrunner said:
No drawdowns in stocks? Guess you missed 1929-1942, 1966 to 1982, 1998-2011 to name the 3 most obvious ones. Stocks did basically nothing in those periods except whipsaw and crush "investor" dreams. Following the 1929 crash it took 25 yrs to recover the 1920's high point. That's worse than a draw down. That's an entire wasted generation of stock investors.
Guess you missed my piece in BARRON'S that found that investing at the 1929 high's and investing an equal amount at the annual HIGHS each year got you even by 1936. A 1-time investment at the 1929 high got you even by 1941 just before WW I.
The power of dividends and compounding, as I said. The 25 year break-even refers to the nominal price of the DJIA which is irrelevant and useless as a measurement.
In the 1966 to 1982 period there were multiple draw downs of 25% to 35% draw downs and essentially a flat chart for 16 yrs. The majority of a generation missing out there.
Yet you still had positive returns thanks to dividends. And small-cap stocks did much better as the DJIA got slaughtered by Nifty Fifty types.
Also, you are measuring peak-to-troughs.....that is NOT rolling time periods as I said. ** Rolling time periods from 1966 would show stocks winning over 75% of the time.**
2000 to 2009 while not 20 yrs was a 35% draw down where many investors totally lost faith in stocks. How quickly we forgot those horrible returns and ONLY think about the euphoria of 1982-2000 and 2009-2021. That's called recency bias. And as Jminski has noted no brokers ever tells their clients to lighten up or to sell.
Nonsense. Bonds and cash are always recommended as part of a diversified portfolio. Find a competent CFA or CFP.
What's going on now in the markets is another 1920's to 1930's type shakeout....they come every 80-100 yrs. There are no safeguards to prevent it either. It arrives because of long term abuse of the monetary and economic systems. But, most everyone in the markets these days has recency bias and only expects draw downs to now be at most only 6-12 months. What's due now in this 100 yr cycle is a "down hard" correction not experienced by most people currently alive. The best performing asset following the 1929 market crash were gold mining stocks. They not only recovered their 1929 highs in only a few years, but went up 6X from the 1932 lows into 1936. You couldn't really buy physical gold at that time due to the FDR gold "ban" so miners were the next best thing. The regular stock market lagged far behind.
The DJIA went up 3x and continued to make money for decades thereafter. Gold stocks saw cost inflation eliminate profit margins the next 4 decades.
Gold went up because the asset they mined -- gold -- was unprofitable at $20.67 and a license to mint money at $35/oz. It was largely government created and then the government took away that largesse by fixing the gold price for almost 40 years.
Stocks and bonds are not investments....they are speculations like everything else. To say otherwise is 'banker's or broker's bias." And as a market aggregate, they require a long term inflationary environment to be successful (ie excess money printing). Which is why the stock market didn't make anyone rich in the 1800's because that was a 100 yr period with a slight deflationary slant. This is basic math. PMs, gold and silver, collectibles, etc are all investment speculations that when purchased at the right times do very well, often MUCH better than stocks/bonds. Best collectible periods so far were 1968 to 1980, 1983-1989, 1996-2008, and 2011-2016. Like any speculative investment, stocks included, if you buy at tops and sell near bottoms, you usually lose. Buy your speculations when there is blood in the street....near bottoms.
Markets were inefficient and information was impossible to gauge.
No great wealth is produced today from gold mining.
One difference in gold and silver and most fine collectibles, they never go to $0 or anything near that.....unlike stocks which go bankrupt all the time. That's a key reason why laggards and losers are kicked off the stock indexes and only winners allowed to stay. My own Fortune 500 company (Ogden Services) went chapter bankrupt in 2002 following the strains of 9/11 on the transportation and entertainment sectors. The stock became worthless. It reorganized in 2003 under a new name but the damage was done. Yes, "good" companies can go bankrupt under black swan events. But usually, there's an underlying weakness that gets accentuated. Stocks are no safer than anything else.
Nonsense. Stocks CREATE wealth while PM's never do. Yes, stocks individually can go to zero but in the aggregate they can't. Can't say that for PMs used in industrial usages (look at the future of palladium/platinum in cars).
Nonsense. Stocks CREATE wealth while PM's never do. Yes, stocks individually can go to zero but in the aggregate they can't. Can't say that for PMs used in industrial usages (look at the future of palladium/platinum in cars).
@rr it sounds like you have had terrible brokers / CFPs. My CPF certainly sold stocks and lightened my portfolio. I have PMs as a store of value. Yes, over time I hope (and think) they will appreciate. Historically you will not come close to the equity market returns with PMs.
I personally had no trouble sleeping when my portfolio was down 35% last year. It had been up many multiples of that previously. As noted earlier, we also lightened some equities, so I am ready to jump back in when conditions warrant it. I understand it is not for everyone, you need to be OK with your own risk tolerance.
Also regarding the liquidity of gold, you mentioned you can get 95% of market for your gold coins within an hour. Most folks these days would like to have a 5% return but you are willing to give it up as part of your "liquidity."
What hooey! Gold went from $20.67 to $35 because FDR decreed it (after he confiscated it), not because of anything to do with the cost of mining.
The only reason that mining costs go up is because of the privately-owned Fed cartel is allowed the privilege of keyboarding "money" into the banking system that would go under (taking the whole debt-based economy with it) without the voluminous extra "liquidity".
Gold (and everything else) goes up because more and more dollars are "created". It's not rocket science.
Never mind gold mining - no great wealth is created by allowing the Fed to create fiat. Talk about leverage - a zero reserve banking system is the ultimate leverage, no collateral needed. That's exactly what we have now, and it's all privately-owned by the members of the Fed cartel, who shall not ever be named or audited.
In a real world economy, based on real world assets, gold mining is a physical, real-world constraint on spending by government. Wars, more socialist programs, and more bailouts are financed by deficit spending these days because no one is held accountable, when constraints are needed more than ever.
Stocks don't create wealth; the efforts of working people create wealth. Furthermore, the stock market is heavily-dependent upon the bond market which is no longer viable because the out-of-control debt component of the entire economy has been mismanaged and corrupted by a socialist model for so long - many decades.
Stock markets always go up during hyperinflation. Right now, we could very well be nearing the inflection point on inflation, and the Fed is trying to crush demand by raising rates. What happens then? The economy gets even worse and the Fed creates more liquidity for more and more gov.com spending as their bandaid "solution", which necessarily means more war spending, more gov.com handouts, (more bailouts for their friends) and more inflation - lots more inflation.
Q: Are You Printing Money? Bernanke: Not Literally
Gold is up $200+ since this thread started, so following your initial plan would have you up $4-5K.
I’m sure some will chime in and tell you some digital asset has quintupled in the same time, but I like your idea if you have the spare cash. Diversify.
@Wingsrule said:
Gold is up $200+ since this thread started, so following your initial plan would have you up $4-5K.
I’m sure some will chime in and tell you some digital asset has quintupled in the same time, but I like your idea if you have the spare cash. Diversify.
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Thanks, I’ve been reading all along but when it got into discussing stocks and comparing …….I didn’t feel the need to chime in because I’m already retired, paid off the mortgage on our new home and put the balance into stocks/bonds and gold.
I’m glad I did decide to buy gold and very happy it’s gone up. But, don’t plan on selling until further down the retirement road if needed. I do have additional cash socked away waiting for the next drop on gold so I can purchase more.
Gold goes up because demand outruns supply. Monetary issues like money growth, velocity, etc....are short-term influences but not long-term determinants.
Nonsense. Stocks CREATE wealth while PM's never do. Yes, stocks individually can go to zero but in the aggregate they can't. Can't say that for PMs used in industrial usages (look at the future of palladium/platinum in cars).
Also regarding the liquidity of gold, you mentioned you can get 95% of market for your gold coins within an hour. Most folks these days would like to have a 5% return but you are willing to give it up as part of your "liquidity."
How much "wealth" did stocks create from 1966-1982 and then 2000-2011. Not much, I can assure you.
You clearly don't understand the 95%. That's what you can get of your total portfolio value when you check out of the gold market over a 5-10 yr rally. In the run from 2016 to 2020 that would have been 95% of the move from $1046 to $2075. I'll take 95% of that gain. And 95% of the move from 2000-2011 ($252 to $1923) where gold outpaced the Dow by 11-1....what wealth did that build for the Dow holders? Uhh, none. Wealth for the banks and brokers....none for J6P. During the October 1987 SM crash I couldn't get out of my stocks until January. Selling gold takes an hour.....stocks? You couldn't even sell them until days/weeks/months until the markets stabilized. Yeah, I know....find a better broker.....lol. Gold needs no broker.
@roadrunner said:
No drawdowns in stocks? Guess you missed 1929-1942, 1966 to 1982, 1998-2011 to name the 3 most obvious ones. Stocks did basically nothing in those periods except whipsaw and crush "investor" dreams. Following the 1929 crash it took 25 yrs to recover the 1920's high point. That's worse than a draw down. That's an entire wasted generation of stock investors.
>
True. Bonds and stocks are always "recommended" by certified brokers until they aren't.....until they aren't (ie 1929, 1966, 2000, 22xx). And I'd bet they were still recommended shortly after those first crashes.....time to get back in.....buy at the dip. PMs sure did a nice job of NOT creating wealth from 1970-1980, 2000-2011, and now 2016-22xx. I'd like a few more chances like that. I laughed my butt off back in 2007 when T. Rowe Price did an investment seminar for my employer. All their plans were basically coded by retirement year.....2020, 2025, 2030, 2035, etc. All quite laughable as they were using a 6-8% annual gain in their estimates. Those 2030 and 2035 portfolio's are probably in great peril after 2025. The mixes of stocks, bonds, and TBonds they had in those plans was absurd...and barely varied from plan to plan to make a difference. PMs or commodities diversification weren't even allowed despite a roaring bull market in those items.
We're not talking about reinvesting. People have to have the money to re-invest. You must be talking about the upper 10% of the income spectrum. My point was that very few of the typical buyers added and added from 1933-1954. They were cooked....for good. And dividends? Most people in the stock market these days are in index funds and stocks NOT paying dividends. And if there is a dividend, it's a trifle in many cases. Dividends are meaningless when gold goes up 11x vs the SM. That's just math. I wouldn't waste my time reading Barrons. All current "financial sense" in the media is all baked into the cake these days. It's more propaganda than anything else. You speak of shifting to small caps from large caps and other moves....something J6P does not do. Or if they do, they lose out in fees. It violates the buy and hold "rule" so often espoused by the brokerage and WS communities. "Buy and hold....and then buy more." I had no idea that comparing the Dow index from decade was so irrelevant. Good to know. Yet that's all you ever see compared in the financial news.
Stocks in aggregate can't go down to $0? Did you miss 1929-1933 when they dropped around 85% in aggregate? I'd call that pretty close to losing it all. When's the last time gold dropped that far? 1869-1870? Since then, never. Biggest drop 68% from 1980 to 1999....followed by a 7.6X rise. It's always about the timing. Did you benefit any from gold in the 2000-2011 run? If you didn't, you need to find a better broker and CFP.
I need to go back to 1929 and let everyone know they will be creating real wealth the following 5-10 yrs. Maybe they would have invested even more by 1929? Lots of major stocks have gone to zero or been bought out cheaply over the decades. I worked for one (lower end of Fortune 500) that went bankrupt in 2002. I'm sure there were several articles in Barrons, Fortune, and WSJ about our company being a "buy" the years prior. In fact our company out-performed the DOW and S&P by a large amount in 2000-2001 going up 35% while most others were tanking. Is that the kind of shift to smaller caps you were talking about? It still ended up bankrupt.
Jim Rickards on gold mining stocks vs. physical gold:
"The easiest way to understand investment in gold mining stocks is that it’s a leveraged investment in gold. If gold goes up 20%, mining stocks can go up 100% or more. The same is true in reverse; if gold goes down, mining stocks can crash. The reason has to do with fixed costs versus variable costs in gold mining. Once fixed costs are covered (not easy), variable costs are highly scalable and with more profit dropping to the bottom line, markets impute a multiple to the stock price. However, this does operate with a lag. If gold goes up today, gold stocks may not react for six months or more because investors want to see if the increase will stick or is transitory. When it comes to picking particular gold mining stocks, the most powerful variable (apart from pure geology) is the quality of management. Have they done this successfully in the past? Is this their first mining venture? Are they fly-by-night stock promoters or seasoned producers? Are they doing exploration and early-stage production or are they mega-companies that grow by acquisition? You need to sort all of that out before taking the plunge on a particular stock."
@derryb said:
Jim Rickards on gold mining stocks vs. physical gold:
"The easiest way to understand investment in gold mining stocks is that it’s a leveraged investment in gold. If gold goes up 20%, mining stocks can go up 100% or more. The same is true in reverse; if gold goes down, mining stocks can crash. The reason has to do with fixed costs versus variable costs in gold mining. Once fixed costs are covered (not easy), variable costs are highly scalable and with more profit dropping to the bottom line, markets impute a multiple to the stock price. However, this does operate with a lag. If gold goes up today, gold stocks may not react for six months or more because investors want to see if the increase will stick or is transitory. When it comes to picking particular gold mining stocks, the most powerful variable (apart from pure geology) is the quality of management. Have they done this successfully in the past? Is this their first mining venture? Are they fly-by-night stock promoters or seasoned producers? Are they doing exploration and early-stage production or are they mega-companies that grow by acquisition? You need to sort all of that out before taking the plunge on a particular stock."
Perhaps the dumbest piece of advice I've ever witnessed here....and there certainly has been no shortage. It blows my mind that these clowns like Turd, Orgeon, Rickards, Rich dad, Rogers, Bulguaria Tyler etc. can continue to sell newsletters to the sheeps. Lots of gullible folk on this here planet. RGDS!
@derryb said:
Jim Rickards on gold mining stocks vs. physical gold:
_"The easiest way to understand investment in gold mining stocks is that it’s a leveraged investment in gold. If gold goes up 20%, mining stocks can go up 100% or more. The same is true in reverse; if gold goes down, mining stocks can crash. The reason has to do with fixed costs versus variable costs in gold mining. Once fixed costs are covered (not easy), variable costs are highly scalable and with more profit dropping to the bottom line, markets impute a multiple to the stock price. However, this does operate with a lag. If gold goes up today, gold stocks may not react for six months or more because investors want to see if the increase will stick or is transitory.
They also jump-the-gun at times. And if gold doesn't follow, they crash back to Earth.
Gold stocks are also NEGATIVELY impacted by rising energy costs, poor capital structure, interest rates, ESG variables, and other factors. A rising gold price from 2000-11 did NOT help gold mining stocks in the aggregate.
A 6-fold rise in gold saw UNPRECEDENTED gold stock value destruction for shareholders.
I prefer the gold in hand. If it goes up 20%..... fantastic. And I still have the gold in hand. If it goes down... perhaps a little disappointment.... but I still have the gold in hand. Simple, but I prefer it that way.
@roadrunner said:
No drawdowns in stocks? Guess you missed 1929-1942, 1966 to 1982, 1998-2011 to name the 3 most obvious ones. Stocks did basically nothing in those periods except whipsaw and crush "investor" dreams. Following the 1929 crash it took 25 yrs to recover the 1920's high point. That's worse than a draw down. That's an entire wasted generation of stock investors.
You are cherrypicking particular starting and ending points. That's something the so-called carnival barkers of investment advice you disdain allegedly engage in. Use rolling time periods to eliminate timing bias.
You also failed to take into account dividend reinvestment, which is 40-45% of the long-term total return from equities.
True. Bonds and stocks are always "recommended" by certified brokers until they aren't.....until they aren't (ie 1929, 1966, 2000, 22xx). And I'd bet they were still recommended shortly after those first crashes.....time to get back in.....buy at the dip. PMs sure did a nice job of NOT creating wealth from 1970-1980, 2000-2011, and now 2016-22xx. I'd like a few more chances like that.
Except once again.....unless you choose a specific starting and ending point, your analogies are meaningless. You don't include dividends which are 40-45% of the long-term return from stocks (100% from bonds) whereas PMs pay NOTHING.
I laughed my butt off back in 2007 when T. Rowe Price did an investment seminar for my employer. All their plans were basically coded by retirement year.....2020, 2025, 2030, 2035, etc. All quite laughable as they were using a 6-8% annual gain in their estimates. Those 2030 and 2035 portfolio's are probably in great peril after 2025. The mixes of stocks, bonds, and TBonds they had in those plans was absurd...and barely varied from plan to plan to make a difference. PMs or commodities diversification weren't even allowed despite a roaring bull market in those items.
Guess what ? Those funds have returned about 8-9% per year if they tracked the S&P 500. Asset Allocation Funds are a great 1-stop shopping for investment goals.
We're not talking about reinvesting. People have to have the money to re-invest. You must be talking about the upper 10% of the income spectrum. My point was that very few of the typical buyers added and added from 1933-1954. They were cooked....for good. And dividends? Most people in the stock market these days are in index funds and stocks NOT paying dividends. And if there is a dividend, it's a trifle in many cases. Dividends are meaningless when gold goes up 11x vs the SM. That's just math.
It's BAD math. Even a 2% dividend yield is better than a 0% dividend yield for PMs.
Is your forecast for gold to go up 11-fold ?
I wouldn't waste my time reading Barrons. All current "financial sense" in the media is all baked into the cake these days. It's more propaganda than anything else. You speak of shifting to small caps from large caps and other moves....something J6P does not do. Or if they do, they lose out in fees. It violates the buy and hold "rule" so often espoused by the brokerage and WS communities. "Buy and hold....and then buy more." I had no idea that comparing the Dow index from decade was so irrelevant. Good to know. Yet that's all you ever see compared in the financial news.
You clearly don't know how muutal funds or wrap accounts work. BARRON's is outstanding as is The WSJ.
Stocks in aggregate can't go down to $0? Did you miss 1929-1933 when they dropped around 85% in aggregate? I'd call that pretty close to losing it all. When's the last time gold dropped that far? 1869-1870? Since then, never. Biggest drop 68% from 1980 to 1999....followed by a 7.6X rise. It's always about the timing. Did you benefit any from gold in the 2000-2011 run? If you didn't, you need to find a better broker and CFP.
So now you're going back to 1-time events like the Depression and the Panic of 1873 ?
I owned gold from 2000-11, and as I am both a CFA and CFP, it would be kinda stupid to go out and hire or find one.
I need to go back to 1929 and let everyone know they will be creating real wealth the following 5-10 yrs. Maybe they would have invested even more by 1929? Lots of major stocks have gone to zero or been bought out cheaply over the decades. I worked for one (lower end of Fortune 500) that went bankrupt in 2002. I'm sure there were several articles in Barrons, Fortune, and WSJ about our company being a "buy" the years prior. In fact our company out-performed the DOW and S&P by a large amount in 2000-2001 going up 35% while most others were tanking. Is that the kind of shift to smaller caps you were talking about? It still ended up bankrupt.
Well, tell us the name. I suspect it was a TMT stock as they were all debt-heavy.
No, stocks in the aggregate don't go down as much as PMs. The historical record is clear, you simply refuse to accept reality. Your choice, of course.
@roadrunner said:
During the October 1987 SM crash I couldn't get out of my stocks until January. Selling gold takes an hour.....stocks? You couldn't even sell them until days/weeks/months until the markets stabilized. Yeah, I know....find a better broker.....lol. Gold needs no broker.
That's not true. While there were liquidity issues on October 19-20th, 1987....you absolutely COULD sell back then.
That's why volume was so high.
There were no liquidity issues during the pandemic in March 2020.
Maybe your broker didn't want to sell until January or maybe you were in illiquid OTC/NASDAQ stocks, but business was open every day that year.
Comments
Not even close to true. Gold mining stocks FAR outperformed the stock market from 1929-1936. Check out Homestake Mining Co which was one of the leading companies at that time. Miners went on to new all time highs before 1936....it took the SM 25 yrs to make new highs. Miners surely outperformed the regular SM from 2002-2008...and it wasn't even close. There are many other periods as well. Don't invest in single mining companies, buy an index fund like XAU, GDX, GDXJ, HUI, etc. There are plenty of ways to spread your risk out. And on the flip side, poorly run companies in the DOW and S&P have been destroyers of wealth for DECADES too. As they approach insolvency those companies are removed from the main indexes.
And from 1929-1954 the stock market didn't gain at all. The Dow went sideways or down for 10-12 years from 1966-1982 and also from 2000-2010. So what's your point of suggesting ONLY PMs do this? Cherry pick a down period for PMs and I'll cherry pick a comparable down period for the stock market. Again, what's your point? Why do inane comparisons like this only seem to show up in print when stocks are out-performing metals in the shorter term? Now if you were on this forum from 2000-2011 that would have a been a period where gold, silver and miners FAR performed the stock market. Will you be around here to discuss the next 10-12 year out-performance by PMs when the stock market severely corrects in both time and amplitude? Or course not. You'll have nothing to discuss.
Gold is a pretty liquid item that you can sell within 24 hrs to any number of local, regional, or national dealers. Heritage makes a market every day in most gold and silver items. Their buy/sell spreads range around 5% typically. I can pick up the phone and within an hour get 95% of market on any US gold coins I own. I call that very liquid. Most resellers out there right now like Ampex, JMBullion, etc. are short of inventory across the board. They've been sold out of numerous gold and silver coin inventory for months. The only illiquidity going on here is that the big buyer can't get enough stuff to sell to their customers. That includes common items like slabbed gold and 90% silver coin. Yes, premiums are strong....because the inventories are low and PMs are a lot harder to get in quantity.
I recall the Oct 1987 stock crash when I called my broker to get out of some insurance company and oil stocks I owned. They told me they weren't taking any sell orders until January. They were swamped. What a joke. Now that's ILLIQUID.
Tell us again how gold and silver were a losing combination from 2000-2011 (as gold went from $252 to $1923) while stocks where the place despite being FLAT for 12 yrs......lol. Your point is that gold was NOT an investment from 1999-2011? It was pretty obvious to me it was as I started buying heavily in arly 2004. That was when I first found out that companies like JPMorgan had tens of $TRILLIONS in an opaque and unregulated market called over-the-counter derivatives. That was the wake up call. Gold was approx $315 at that time and silver $4's. The Dow had been down for 3 yrs and looked to be going nowhere (which it did until the March 2009 crash bottom).,,,which took it back to early 1997 levels. 12 years of going nowhere BUT maybe paying some dividends. Gold didn't pay any dividends or interest but it went up 7.6X. Which was better, $0 gain but dividends or 7.6X higher and NO interest?
Other good periods for PMs were 1966-1980 (when the stock market floundered for 16 yrs). Markets are cyclical. And to think only stocks are safe and liquid "for the long term" is not smart. The best US rare coins went up 15X from 1975 to 1980. And then again 5X from 1985-1990 and probably 3x from 1996-2008. The point being, there are times to be more heavily into specific items and times to be light or out of others. In a bigger picture, the massive inflationary period since 1913 is coming to a major shakeout. Don't bet on what's been the norm for 10 yrs, 40 yrs, or even 80-100 yrs to protect you. Your customers and investors deserve better from you.
Stocks, bonds, chickens, and precious metals. Am I diversified?
National Commemorative Medals of the U.S. Mint:
https://www.pcgs.com/setregistry/u-s-coins/medals-tokens/national-commemorative-medals-united-states-mint-1940-present/alltimeset/195526
@tincup - regarding the environment such as it is and the percentage in precious metals - I would first say to pay off all of your debts, including your mortgage and any other loans.
Then I'd focus on a steady accumulation of precious metals, up to 50% of your net worth, maybe even more. The 5% to 10% recommendation is bullshit, pardon my french. But, it has to be physical pms, not ETFs or stocks.
I started out with a 25%/50%/25% silver/gold/platinum mix about 15 years ago when I first started keeping track, but it slowly became 15%/70%/15% as the price of gold gained while the others languished. No worries - silver and platinum will have their day, and the mix is very nicely-balanced.
I keep a cash reserve that is enough to keep me liquid for at least 2 years if the banks have a meltdown. No debt, pms, cash and a house with vehicles. Works for me.
I knew it would happen.
When stocks go down sellers will be looking for an alternative. Most know gold is an alternative, but are reluctant to take possession when they can make an easy PM play with miner ETFs
Give Me Liberty or Give Me Debt
As far as the safety and steady gains of the Dow Index. Look at the 86% loss from 1929 to 1932. A major 80-100 yr correction is in the cards this decade. Who can say what % drop that will be? I see a very trackable 4th wave triangle from 1997 to 2015 that was broken out from on the way to the 37,000 high. I would expect the Dow to eventually retrace into that 1997-2015 triangle (expanded wedge). The triangles have excellent symmetry too. That means a drop to 4,400-18,200. I only pick the 18,200 mark because that's about where the deep March 2020 Pandemic crash went to. I expect that to be re-tested....and probably well below that deeper into that 15 yr triangle. Such a move will shock the Dow faithful as they think a 50-66% correction as "impossible." But, those things are quite common, esp. when correcting a move from 1932 to 2022 that went around 60 to 37,000. This probably happens by the next 8 yr business confidence cycle low due in 2028....when gold should make another all time high.
Just don't compare it to firewood.
Knowledge is the enemy of fear
Guess you missed my piece in BARRON'S
that found that investing at the 1929 high's and investing an equal amount at the annual HIGHS each year got you even by 1936. A 1-time investment at the 1929 high got you even by 1941 just before WW I.
The power of dividends and compounding, as I said. The 25 year break-even refers to the nominal price of the DJIA which is irrelevant and useless as a measurement.
Yet you still had positive returns thanks to dividends. And small-cap stocks did much better as the DJIA got slaughtered by Nifty Fifty types.
Also, you are measuring peak-to-troughs.....that is NOT rolling time periods as I said. ** Rolling time periods from 1966 would show stocks winning over 75% of the time.**
Nonsense. Bonds and cash are always recommended as part of a diversified portfolio. Find a competent CFA or CFP.
The DJIA went up 3x and continued to make money for decades thereafter. Gold stocks saw cost inflation eliminate profit margins the next 4 decades.
Gold went up because the asset they mined -- gold -- was unprofitable at $20.67 and a license to mint money at $35/oz. It was largely government created and then the government took away that largesse by fixing the gold price for almost 40 years.
Markets were inefficient and information was impossible to gauge.
No great wealth is produced today from gold mining.
Nonsense. Stocks CREATE wealth while PM's never do. Yes, stocks individually can go to zero but in the aggregate they can't. Can't say that for PMs used in industrial usages (look at the future of palladium/platinum in cars).
@rr it sounds like you have had terrible brokers / CFPs. My CPF certainly sold stocks and lightened my portfolio. I have PMs as a store of value. Yes, over time I hope (and think) they will appreciate. Historically you will not come close to the equity market returns with PMs.
I personally had no trouble sleeping when my portfolio was down 35% last year. It had been up many multiples of that previously. As noted earlier, we also lightened some equities, so I am ready to jump back in when conditions warrant it. I understand it is not for everyone, you need to be OK with your own risk tolerance.
Also regarding the liquidity of gold, you mentioned you can get 95% of market for your gold coins within an hour. Most folks these days would like to have a 5% return but you are willing to give it up as part of your "liquidity."
What hooey! Gold went from $20.67 to $35 because FDR decreed it (after he confiscated it), not because of anything to do with the cost of mining.
The only reason that mining costs go up is because of the privately-owned Fed cartel is allowed the privilege of keyboarding "money" into the banking system that would go under (taking the whole debt-based economy with it) without the voluminous extra "liquidity".
Gold (and everything else) goes up because more and more dollars are "created". It's not rocket science.
Never mind gold mining - no great wealth is created by allowing the Fed to create fiat. Talk about leverage - a zero reserve banking system is the ultimate leverage, no collateral needed. That's exactly what we have now, and it's all privately-owned by the members of the Fed cartel, who shall not ever be named or audited.
In a real world economy, based on real world assets, gold mining is a physical, real-world constraint on spending by government. Wars, more socialist programs, and more bailouts are financed by deficit spending these days because no one is held accountable, when constraints are needed more than ever.
Stocks don't create wealth; the efforts of working people create wealth. Furthermore, the stock market is heavily-dependent upon the bond market which is no longer viable because the out-of-control debt component of the entire economy has been mismanaged and corrupted by a socialist model for so long - many decades.
Stock markets always go up during hyperinflation. Right now, we could very well be nearing the inflection point on inflation, and the Fed is trying to crush demand by raising rates. What happens then? The economy gets even worse and the Fed creates more liquidity for more and more gov.com spending as their bandaid "solution", which necessarily means more war spending, more gov.com handouts, (more bailouts for their friends) and more inflation - lots more inflation.
I knew it would happen.
This is not a thread to discuss the pros and cons of gold history or monetary policy. Answer Stephanie’s question or move along…
Have you been deputized to be a forum moderator?
Worry is the interest you pay on a debt you may not owe.
Nope, just trying to keep it on topic.
Gold is up $200+ since this thread started, so following your initial plan would have you up $4-5K.
I’m sure some will chime in and tell you some digital asset has quintupled in the same time, but I like your idea if you have the spare cash. Diversify.
Who is this Stephanie and what was the question?
To the OP, one should never ever sell the gold, and especially not right now. RGDS!
The whole worlds off its rocker, buy Gold™.
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Thanks, I’ve been reading all along but when it got into discussing stocks and comparing …….I didn’t feel the need to chime in because I’m already retired, paid off the mortgage on our new home and put the balance into stocks/bonds and gold.
I’m glad I did decide to buy gold and very happy it’s gone up. But, don’t plan on selling until further down the retirement road if needed. I do have additional cash socked away waiting for the next drop on gold so I can purchase more.
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Thanks again everyone for your comments.
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CoinsAreFun Toned Silver Eagle Proof Album
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Gallery Mint Museum, Ron Landis& Joe Rust, The beginnings of the Golden Dollar
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More CoinsAreFun Pictorials NGC
Stefanie
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Why ……that would be me
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CoinsAreFun Toned Silver Eagle Proof Album
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Gallery Mint Museum, Ron Landis& Joe Rust, The beginnings of the Golden Dollar
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More CoinsAreFun Pictorials NGC
Damn, sorry about that, Stefanie
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Meh, no worries. Alls fun and fair in the coin hobby, er biz, er politics…oppss. Well you know what I mean
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CoinsAreFun Toned Silver Eagle Proof Album
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Gallery Mint Museum, Ron Landis& Joe Rust, The beginnings of the Golden Dollar
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More CoinsAreFun Pictorials NGC
Very good, well don't sell yet. RGDS!
The whole worlds off its rocker, buy Gold™.
Gold goes up because demand outruns supply. Monetary issues like money growth, velocity, etc....are short-term influences but not long-term determinants.
How much "wealth" did stocks create from 1966-1982 and then 2000-2011. Not much, I can assure you.
You clearly don't understand the 95%. That's what you can get of your total portfolio value when you check out of the gold market over a 5-10 yr rally. In the run from 2016 to 2020 that would have been 95% of the move from $1046 to $2075. I'll take 95% of that gain. And 95% of the move from 2000-2011 ($252 to $1923) where gold outpaced the Dow by 11-1....what wealth did that build for the Dow holders? Uhh, none. Wealth for the banks and brokers....none for J6P. During the October 1987 SM crash I couldn't get out of my stocks until January. Selling gold takes an hour.....stocks? You couldn't even sell them until days/weeks/months until the markets stabilized. Yeah, I know....find a better broker.....lol. Gold needs no broker.
Sp500 total returns...
Jan 1966 to Jan 1982 average 5.51%.
Jan 1966 to Dec 1982 average 6.61%
2000 to 2011 average just under 1%.
Is this when one counters with "what did gold return from 1980 to 2000 and from 2011 to 2021?"
Whats it like to live in the past?
Knowledge is the enemy of fear
>
True. Bonds and stocks are always "recommended" by certified brokers until they aren't.....until they aren't (ie 1929, 1966, 2000, 22xx). And I'd bet they were still recommended shortly after those first crashes.....time to get back in.....buy at the dip. PMs sure did a nice job of NOT creating wealth from 1970-1980, 2000-2011, and now 2016-22xx. I'd like a few more chances like that. I laughed my butt off back in 2007 when T. Rowe Price did an investment seminar for my employer. All their plans were basically coded by retirement year.....2020, 2025, 2030, 2035, etc. All quite laughable as they were using a 6-8% annual gain in their estimates. Those 2030 and 2035 portfolio's are probably in great peril after 2025. The mixes of stocks, bonds, and TBonds they had in those plans was absurd...and barely varied from plan to plan to make a difference. PMs or commodities diversification weren't even allowed despite a roaring bull market in those items.
We're not talking about reinvesting. People have to have the money to re-invest. You must be talking about the upper 10% of the income spectrum. My point was that very few of the typical buyers added and added from 1933-1954. They were cooked....for good. And dividends? Most people in the stock market these days are in index funds and stocks NOT paying dividends. And if there is a dividend, it's a trifle in many cases. Dividends are meaningless when gold goes up 11x vs the SM. That's just math. I wouldn't waste my time reading Barrons. All current "financial sense" in the media is all baked into the cake these days. It's more propaganda than anything else. You speak of shifting to small caps from large caps and other moves....something J6P does not do. Or if they do, they lose out in fees. It violates the buy and hold "rule" so often espoused by the brokerage and WS communities. "Buy and hold....and then buy more." I had no idea that comparing the Dow index from decade was so irrelevant. Good to know. Yet that's all you ever see compared in the financial news.
Stocks in aggregate can't go down to $0? Did you miss 1929-1933 when they dropped around 85% in aggregate? I'd call that pretty close to losing it all. When's the last time gold dropped that far? 1869-1870? Since then, never. Biggest drop 68% from 1980 to 1999....followed by a 7.6X rise. It's always about the timing. Did you benefit any from gold in the 2000-2011 run? If you didn't, you need to find a better broker and CFP.
I need to go back to 1929 and let everyone know they will be creating real wealth the following 5-10 yrs. Maybe they would have invested even more by 1929? Lots of major stocks have gone to zero or been bought out cheaply over the decades. I worked for one (lower end of Fortune 500) that went bankrupt in 2002. I'm sure there were several articles in Barrons, Fortune, and WSJ about our company being a "buy" the years prior. In fact our company out-performed the DOW and S&P by a large amount in 2000-2001 going up 35% while most others were tanking. Is that the kind of shift to smaller caps you were talking about? It still ended up bankrupt.
Jim Rickards on gold mining stocks vs. physical gold:
"The easiest way to understand investment in gold mining stocks is that it’s a leveraged investment in gold. If gold goes up 20%, mining stocks can go up 100% or more. The same is true in reverse; if gold goes down, mining stocks can crash. The reason has to do with fixed costs versus variable costs in gold mining. Once fixed costs are covered (not easy), variable costs are highly scalable and with more profit dropping to the bottom line, markets impute a multiple to the stock price. However, this does operate with a lag. If gold goes up today, gold stocks may not react for six months or more because investors want to see if the increase will stick or is transitory. When it comes to picking particular gold mining stocks, the most powerful variable (apart from pure geology) is the quality of management. Have they done this successfully in the past? Is this their first mining venture? Are they fly-by-night stock promoters or seasoned producers? Are they doing exploration and early-stage production or are they mega-companies that grow by acquisition? You need to sort all of that out before taking the plunge on a particular stock."
Give Me Liberty or Give Me Debt
Gold in-hand is much more reassuring.
I knew it would happen.
Perhaps the dumbest piece of advice I've ever witnessed here....and there certainly has been no shortage. It blows my mind that these clowns like Turd, Orgeon, Rickards, Rich dad, Rogers, Bulguaria Tyler etc. can continue to sell newsletters to the sheeps. Lots of gullible folk on this here planet. RGDS!
The whole worlds off its rocker, buy Gold™.
They also jump-the-gun at times. And if gold doesn't follow, they crash back to Earth.
Gold stocks are also NEGATIVELY impacted by rising energy costs, poor capital structure, interest rates, ESG variables, and other factors. A rising gold price from 2000-11 did NOT help gold mining stocks in the aggregate.
A 6-fold rise in gold saw UNPRECEDENTED gold stock value destruction for shareholders.
Rogers... as in Jim Rogers is a clown? I don't think so. The guy may be worth some 300 million.
I prefer the gold in hand. If it goes up 20%..... fantastic. And I still have the gold in hand. If it goes down... perhaps a little disappointment.... but I still have the gold in hand. Simple, but I prefer it that way.
You are cherrypicking particular starting and ending points. That's something the so-called carnival barkers of investment advice you disdain allegedly engage in. Use rolling time periods to eliminate timing bias.
You also failed to take into account dividend reinvestment, which is 40-45% of the long-term total return from equities.
Except once again.....unless you choose a specific starting and ending point, your analogies are meaningless. You don't include dividends which are 40-45% of the long-term return from stocks (100% from bonds) whereas PMs pay NOTHING.
Guess what ? Those funds have returned about 8-9% per year if they tracked the S&P 500. Asset Allocation Funds are a great 1-stop shopping for investment goals.
It's BAD math. Even a 2% dividend yield is better than a 0% dividend yield for PMs.
Is your forecast for gold to go up 11-fold ?
You clearly don't know how muutal funds or wrap accounts work. BARRON's is outstanding as is The WSJ.
So now you're going back to 1-time events like the Depression and the Panic of 1873 ?
I owned gold from 2000-11, and as I am both a CFA and CFP, it would be kinda stupid to go out and hire or find one.
Well, tell us the name. I suspect it was a TMT stock as they were all debt-heavy.
No, stocks in the aggregate don't go down as much as PMs. The historical record is clear, you simply refuse to accept reality. Your choice, of course.
That's not true. While there were liquidity issues on October 19-20th, 1987....you absolutely COULD sell back then.
That's why volume was so high.
There were no liquidity issues during the pandemic in March 2020.
Maybe your broker didn't want to sell until January or maybe you were in illiquid OTC/NASDAQ stocks, but business was open every day that year.